The Austin Housing Market
The average housing cost in Austin is $579,000 with a YoY change of 24.5%. To learn more about Austin, let’s break down everything from the job market to the cost of living below.
Rated the best U.S. market for real estate investment in 2019 by Urban Land Institute, Austin is the culturally-enriched and beautifully unique city practically everyone is dying to be a part of. With lush flora and a city life unparalleled even by the likes of multiple other major cities in the region, it’s no wonder that Austin’s diverse residents stand by the motto, ‘Keep Austin Weird.’ Unlike San Antonio or Houston, Austin prides itself on its unique infrastructure, culture, and the many advantages it has to offer its well-over 2 million residents.
Whether you currently own property in the Austin metropolitan area, or are looking to invest in the near future and are considering DIY property rental management, our everything you need to know about this Texas gem is compiled below. Austin’s eccentric nature, favorable market, and ties to many booming job industries truly show exactly why this city is the capital of the second largest state in our nation.
To see why Austin is considered the best state capital to live in, let’s take a closer look at the market and the community surrounding it below.
What is the Average House Price in Austin?
With Austin being named one of the happiest cities in America and earning a community and environment score of 94%, it’s no wonder why more and more property owners and hardworking families are setting their sights on the ‘wild and free’ city.
Due to its constant growth and closeness to some of the many wonders of Texas, the average house price in Austin is $579,000 which is $204,100 more than the national average. That’s good news for investors. With the housing market up, rent prices also reflect this growth. Furthermore, the rise of property management technology means the costs associated with managing a rental home can be drastically reduced. An affordable property management app can provide you with all of the tools you need to manage your investment without eating into your returns. All of this and more are discussed in the article ‘5 Effective Tips For Becoming A Good Landlord’, which was designed to help you invest in property and earn the trust of your community along the way.
How Much do Residents Need to Earn to Live in Austin?
Although investing in Austin real estate is highly recommended by countless investment and real estate magazines including Forbes, it is still crucial that you do the math and see precisely how much your tenants will need to earn to afford your home, how much your rent rate should be, and whether or not the neighborhood you are looking at investing in is right for your ROI and portfolio overall. Considering the fact that it is recommended that you spend no more than 30 percent of your pre-tax income on your rent, let’s take a look at the average rent in the highest-priced and lowest-priced neighborhoods below.
The highest-priced rent in the Austin metropolitan area belongs to the Clarksville neighborhood and sits at $4,200 per month. Meanwhile, the lowest-priced rent in the Austin metro belongs to the Johnston Terrace neighborhood and sits at $1,200 per month.
With this said, you will need to make roughly between $48,000 and $168,000 annually to rest easy in this ever-expanding city as a tenant. With the median household income in Austin sitting at $75,413, being able to afford rent for the average SFR should be manageable. Furthermore, with this city income average being nearly $10k more than the national average ($67,521), it makes sense why more and more hardworking families are turning to this prosperous city.
Lastly, since many landlords are now turning to automated property management systems to track their investments, it should be noted that the average monthly mortgage payment in Austin, TX is $1,426. This number falls below most of the lowest rental prices in the state making it rather easy to see a return on your investment each and every year.
The Cost of Living in Austin
Understanding the average cost of living in a city is essential when looking to invest in real estate there and work with local tenants. According to the Cost of Living Index from the Council for Community and Economic Research, Austin sits 1.8% above the national average cost of living, making it slightly more expensive than other cities but well worth the additional costs simply for the job market and culture alone.
To see a more comprehensive breakdown of Austin’s cost of living, here are the numbers compared with the national average:
Housing: The cost of housing in Austin is 9.8 percent higher than the national average
Utilities: The cost of utilities in Austin is 5 percent lower than the national average
Miscellaneous goods and services: The cost of miscellaneous goods and services in Austin is 3.2 percent more than the national average
Groceries: The cost of groceries in Austin is 7.8 percent below the national average
Healthcare: The cost of healthcare in Austin is 8.6 percent higher than the national average
Transportation: The cost of transportation in Austin is 10.4 percent lower than the national average
Taking these numbers into account, it is clear why the average demographic for Austin residents are upper middle class and middle-aged families in the tech and business management industries. This important data can help you establish the ideal rent price for your investment property and guide you on the best ways to market to your desired tenants as well.
The Job Market in Austin: Big Names are Headed This Way
Dubbed the ‘new Silicon Valley,’ Austin’s tech market is booming. From Apple and Samsung, to Amazon and Tesla, the companies investing in this massive metropolis are astonishing. Here are some of the latest highlights of investment in the Austin market:
Elon Musk expects Tesla to invest over $10 Billion in its Austin factory and headquarters, generating over 20,000 direct jobs and over 100,000 indirect jobs
Apple continues its $1 Billion, 3 million square-foot campus development in Austin which will house 5,000 employees initially and up to 15,000 in total
Amazon increases its operations in Austin with an expanded development center, a new retail distribution center, and a new fulfillment center, leading to well over 2,000 additional jobs
Oracle moves its corporate headquarters to Austin, adding over 2,000 jobs to the market
Samsung announces its plan to build a $17 Billion chip plant near Austin
Over half of all homes in Austin are rented to long term tenants by the property’s owners
Asset tokenization platforms like Tirios Real Estate Investment are making it easier for individuals to invest in the city and reap the benefits without massive upfront costs
Overall, the job market in Austin is booming as well with, unsurprisingly, software development and IT being the top jobs in the region. These jobs typically reach into the six figures making the region also well-compensated and able to pay for the monthly costs of rent and luxuries with ease.
The Most and Least Expensive Neighborhoods in Austin
Finding the perfect neighborhood in the Austin Metropolis can be difficult considering the fact that they are all terrific and different in their own ways. However, as long as you stick with one of the cities listed below, you are sure to own property in a highly sought-after neighborhood and reap the benefits in doing so.
The Most Expensive Austin Neighborhoods
Downtown Austin, Georgetown, and Clarksville are some of the most expensive neighborhoods in the Austin metro—and for good reason. From outdoor activities galore and food that will blow your mind, to top ranked schools and a nightlife that’s hard to beat, these artsy and creative neighborhoods are sure to catch your eye.
The most expensive average rent is located in Clarksville, where you will likely pay roughly $4,200 for a single family rental. While these homes do cost more on the market, they have amenities and the advantage of being close to the heart of the city to make up for it. It is also a hotspot for young entrepreneurs and hardworking families willing to pay to live in the heart of it all.
The Cheapest Austin Neighborhoods
For investors looking to stick to less expensive neighborhoods in order to save money on the upfront investment, and work with the middle-class tenants that are easier to acquire, Cedar Park, Cherrywood, and North University are ideal. They have a lower barrier for entry than other neighborhoods in the city and are still considered incredibly nice areas to live in Texas. They offer amazing schools, delicious restaurants, boutique stores, daily events, and a rich nightlife, creating an ideal lifestyle for most tenants. .
The cheapest neighborhood in Austin is North University, where the average cost of a single family rental is $980. This is well over $2,000 less per month than Downtown Austin, yet still boasts all the wonder of the city at a measly 2.2 miles difference. All in all, no matter what neighborhood you choose, Austin is truly an investment-worthy city for anyone looking to invest in real estate through traditional ownership or through a pooled real estate investment.
Average Family Rent Prices in Austin Neighborhoods
Austin’s average rent for a single-family 3 bedroom house is $3,130, but the city you choose to invest or live in can sway this number heavily. Below are the main neighborhoods in the Austin metropolitan area along with their average rent prices specifically to help you find the right neighborhood for you.
Find Your Austin Neighborhood
Knowing all the opportunities for investment that Austin has to offer, you may be wondering how you can join in on the fun and find a property in a neighborhood that is sure to grow as the tech influx continues. Fortunately, all the tools you need are available with just a bit of research and understanding of the workforce boom before it happens. To best find the Austin neighborhood with the most potential and value in your price range, you will want to first figure out its assumed value based on location, social perks, and design. Then, to back up your value analysis, you can also use Roofstock’s rental potential calculator and take a look at other homes in the area to see how much they rent for and what makes some more expensive than others (private pool, remodeled kitchen, hardwood flooring, proximity to downtown, etc.)
For Austin specifically, the best locations are the closest to the downtown area as this is where most of the large tech companies are planning to reside. It also offers many social perks like outdoor activities, nightlife, and community events. Lastly, these homes tend to be more modern which helps you gain points based on design as well. Although these homes are a bit more expensive, if you have the money to invest in them, you are sure to never have an empty house looking for a tenant and will be able to increase rent year after year along with the tech boom quite easily.
For more insight into other neighborhoods that might match your goals, don’t hesitate to look at the market on Zillow and compare the rent and proposed value of each home carefully before making a decision. What you musn’t forget is that it’s your money, so why waste it on fair-weather deals when you can ensure your investment is smart from the start? This is where paying attention to tech trends in Austin and looking at rent averages makes all the difference.
Find your Austin Investment: Ways to Invest in Austin Real Estate
With a rich culture and diverse residents to match, it’s clear why Austin’s real estate market is skyrocketing year after year. Whether you live in Austin or simply want to take advantage of the thriving real estate market there, Tirios can help! Tirios real estate syndication software takes the guesswork out of real estate investment and lets you invest in pieces of a property through the power of blockchain. Start building your real estate portfolio for as little as $1,000 and let Tirios help you invest wisely in the best places in Austin without all the down payments and processing fees.
To see all that Tirios can do for you, don’t hesitate to buy tokenized real estate in Austin or use the Tirios property management app to streamline your property rental process today! You can also check out the recent article, ‘Pros and Pitfalls of DIY Property Management’ to learn more about streamlining the management side of your investment. After all, Austin is often referred to as ‘the place young people go to retire,’ so why not retire in style with a portfolio as diverse as the city of Austin itself?